THE CASE OF THE TRANS-MISSOURI FREIGHT

ASSOCIATION.
The importance of the decision of a court of justice may
depend either upon the principle in olved in the decision, or
upon the practical effect of-the decision as affecting human
life, liberty or property interests. The recent decision of
the Supreme Court of the United States is of wide spread
importance, not only by reason of the principle of law
involved by the court, but because the enunciation therepf may
seriously affect the value of securities of railways in the United
States. This decision was rendered in the case of the Trans-
Missouri Freight Association, decided on March 22, 1897.
In view of its importance, and of the general. apprehension
that it has caused, it may be of some value to consider carefully
the decision, not only as to that which was actually decided
with reference to the facts of the particular case, but also as to
the principle of law, which will determine similar cases as they
may arise in the future. If the principle itself be of impor-
tance, afortiom, is it so when declared by a court, the breadth
of whose jurisdiction and whose personnel entitle any decision
thereof tQ the utmost respect.
The facts in the case are as follows: By articles of agree-
ment, dated March 15, 1889, fifteen railroad companies, com-
petitors for the freight traffic in that part of the United States
between the Mississippi and Missouri Rivers and the Pacific
Ocean, formed an association called the Trans-Missouri
Freight Association. The articles of agreement provided,
inter alia, that the parties thereto would establish and main-
tain such rates, rules, and regulations on freight traffic between
competitive points as a committee of their choosing should
recommend as reasonable; that these rates, rules, and regula-
tions should be public; that there should be monthly meetings
of the association composed of one representative from each
railroad company; that each company should give five days'
notice before each monthly meeting of every reduction of rates
or deviation from the rules it should propose to make; that it
307
308 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION.

would advise with the representatives of the other members at

the meeting relative to the proposed modification; that it
would submit the question of its proposed action to a vote at
that meeting, and if the proposition should be voted down,
that it would then give ten days' nptice that it would make
the modification, notwithstanding the vote, before it should
put the proposed change in effect, and that no member would
falsely bill any freight, or bill any freight at a wrong classifica
tion; and that any member could withdraw from the associa-
tion on a notice of thirty days. The articles further provided
that in case any of the managers of the lines, parties to the
agreement, should fail to agree upon any question arising
thereunder, that then the question should be referred to an
arbitration board, which should consist of three members of
the executive board of the Inter-State Commerce Railway
Association, provided, however, that in case of arbitration in
which the members of the association only were interested,
that they might by unanimous vote substitute a special board.
In other words, it was in substance, "an agreement between
the corporations by which a uniform classification of freight is
obtained, by which the secret undercutting of rates is sought
to be avoided, and the rates as stated in the published rate
sheets, and which, as a general rule, are required by law to be
filled with the Inter-State Commerce Commission or secured
against arbitrary and sudden changes."'
On January 6, 1892, the United States Attorney for the
District of Kansas, under the direction of the Attorney-
General, filed a bill in equity in the Circuit Court of the
United States of the District of Kansas on behalf of the United
States against this Association, and the railway companies
which constituted the same. The bill, after reciting the articles
of agreement in question, alleged, inter alia,that the defendant
railroad companies were common carriers, and owning inde-
pendent and competitive lines of railroads in that pirt of the
United States west of the Mississippi and Missouri Rivers;
that they were engaged in transporting freight among the
states and to and from foreign nations; that the defendants
I Per White, J., in his dissenting opinion.
 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. 309

-not being content with the rates of freight that they were
receiving, intending oppressively to augment these rates so as
to counteract the effect of free competition upon them, and
..establish and maintain arbitary rates, thus procuring large
;sums of money from the people engaged in inter-state
commerce in the aforesaid territory; that under the agree-
ment rules,, regulations, and rates for carrying freight
over the railroads of the defendant companies were fixed
by the association, and have since been maintained by
them; thaqt since that date these railroad companies have
declined and refused at all times to fix or give rates for
the carriage of freight based upon the cost of constructing
.and maintaining their several lines of railroads and the cost
of carrying freight over the same, and such other elements
.as should be considered in establishing tariff rates on each
particular road; and that the people engaged in inter-state.
-commerce have been compelled to pay the arbitrary rates of
freight and submit to the arbitrary rules and regulations estab-
lished and maintained by the association under the agreement,
and have been and are deprived of the benefit that might be
expected to flow from free competition between the several
lines of railroads of the defendant companies, and that in this
-way the defendant companies have continued, in restraint of
trade and commerce, among the states, and have attempted to
-monopolize and have monopolized a part of this commerce,
-in violation of the provisions of the Act of Congress, July 2,
189o. The bill further prayed a decree dissolving the asso-
-ciation, and asked for an injunction restraining the several
defendants from carrying out the terms of the said agreement,
or from agreeing to prevent each and any of them from carry-
ing freight at such rates as shall be voluntarily fixed by the
officers and agents of each of said roads, acting independently
in its own behalf.
1 26 Stat. at Large, 209, Ch. 647.
2
The title and sections of that act material to this question are as
follows:
AN AcT to protect trade and commerce against unlawful restraints and
-monopolies.
Sec. x. Bvery contract, combination in the form of trust or otherwise,
310 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION.

The answer of the defendants admitted that they were-

common carriers, that they owned independent and competing
lines of railroads, but denied that they owned the only through,'
lines of railroads in the aforesaid territory; it also admitted.
that they had entered into the agreement in question, that
yules, regulations and rates of 'freight have been fixed and
changed by the association formed, which rates have been corn--
plied with and maintained. They denied that they intended, in
connection with the formation of the association or otherwise,.
to unjustly or oppressively augment such rates, or to counter-
act the effect of free competition on prices, or facilities of'
transportation; they deny that they had any intention by the
formation of the association to monopolize or attempt to-
monopolize the freight traflic affected by it, and deny that the
agreement has had such effect. Pending the decision thereof,
the association was voluntarily dissolved. The cause having
been heard on bill and answer on November 28, 1892. Judge-
Riner, the District Judge, 1 dismissed the bill for two reasons,
(I) that the agreement in question was not a contract in,
restraint of trade within the meaning of that phrase as used in-
the Act of July 2, 189o, as the restraint provided for in the
agreement was a reasonable one, in that it was necessary to-
the protection to the parties to this agreement and was not preju-
dicial to the public interests, and neither was it a monopoly-
nor an attempt at one; and (2) that common carriers were
not within the provisions of the Act of July 2, 189o. Their
or conspiracy in restraint of trade or commerce among the several states,.
or with foreign nations, is hereby declared to be illegal. Every person
who shall make any snch contract or engage in any such combination or
conspiracy shall be deemed guilty of a misdemeanor, and on conviction
thereof shall be punished by a fine not exceeding five thousand dollars,
or by imprisonment not exceeding one year, or by both said punishments.
in the discretion of the court.
Sec. 2. Every person who shall monopolize or attempt to monopolize,
or combine or conspire with any other person or persons to monopolize
any part of the trade or commerce among the several states or with
foreign nations, shall be deemed guilty of a misdemeanor, and on con-
viction thereof shall be punished by-fine not exceeding five thousand
dollars, or by imprisonment not exceeding one year, or by both said pun-
ishments in the discretion of the court.
153 Fed. Rep. 44o.
 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. 3 11

-duties and liabilities .being solely governed by the provisions

of the" Inter-State Commerce Act.1 Upon an appeal to the
,Circuit Court ofAppeals of the Eighth Circuit, that court of two
to one, on October 2, 1893,2 by a vote affirmed the decision
of the District Judge, for the first reason as given by him and
declining to decide whether common carriers were subject to
the Act of July 2, 189o. An appeal was then taken to the
Supreme Court of the United States, who, by a vote of five to
four, reversed the decisions of the Circuit Court of Appeals and
of the District Court. Mr. Justice Peckham delivering the
opinion of the court on behalf of himself, and Justices, Brewer,
Brown, Fuller, and Harlan, while Mr. Justice White delivered
a dissenting opinion in which Justices Field, Gray, and Shiras
concurred.
The importance of the decision would seem to justify the
detail in which the facts have been stated. Two substantial
questions were presented to the court, both of which must be
-and were answered in the affirmative in order to maintain
the bill:
(I) Does the Act of July 2, 189o, embrace within its pro-
visions common carriers by railroads, and if so (2), does the
agreement set forth in the bill violate any provisions of that
Act? In this article it is proposed to only consider briefly the
facts in the case and the opinion of the court in answering
the second question in the affirmative. An examination of the
Act of July 2, 189o, will show that it is aimed at two evils,
(a) contracts in restraint of trade, and (b) monopolies. Mr.
Justice Peckham, in his opinion, does not pretend that the
agreement in question constituted a monopoly or an attempt at
one, but bases the decision of the court solely upon the ground
that the articles of agreement which gave birth to the Trans-
Missouri Freight Association constituted a contract in restraint
of trade, as that phrase is used in the Act of July 2, 1890, and
that, therefore, the execution thereof was in violation of the
terms of that act.
Under this view of the statute it is of importance to deter-
1
Act of Congress, Feb. 4, 1887.
2 58 Fed. Rep. 58.
312 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION.

mine what is a "contract in restraint of trade" as shown by

the historical development of this branch of the law.
It is submitted that the history'of its development is* the-
history of a judicial declaration of public policy, undoubtedly
sound at the time it was made, of its continued declaration by
the courts, together with a grudging recognition that the
severity of the common law rule should be changed to meet.
the changes in industrial conditions, and that as the reason for
the rule became limited in its application so correspondingly
should the prohibited class be narrowed. At the time when
this doctrine was first enunciated by the courts (1415), combin-
ations of capital such as exist to day were of course unknown.
The protection of the individual was the ratio decidendi, indi-
rectly of course, the interests of the public were considered for
"especially in young men, who ought in their youth (which
is the seed time) to have lawful sciences and trades which are
profitable to the commonwealth, and whereof they might reap,
the fruit in their old age, for idle in youth, poor in age, and
therefore the common law abhors all monopolies which pro-
hibit any from working in any lawful trade. "'
The commercial activity of England: the fact that no
longer could a man only lawfully exercise a trade to which he
had been duly apprenticed and admitted, soon demonstrated
to the English courts that such, a piori, declarations of'
public policy as given above were not, ipso facto, sound and
that a practical enforcement thereof would foster the very evil
that the doctrine was meant to prevent, and so the courts said,.
if the restraint be partial with respect to space, and reasonable,
we w.ill enforce it,' and we will consider it reasonable if two
elements be present, first, necessity of such protection, to the
promisee, and second, that such protection shall not be so large
as to interfere with the interests of the public.3 and finally the-
courts declared that the fact that the restraint was partial as to
space was no longer a pre-requisite to its validity.'
'Ipswich Taylor's Case, ix Cooke, 540.
2 Mitchell v. Reynolds, I P. Wins. I81.
3
4
Homer v. Graves, 7 Bing. 735.
Jones v. Lees, I Man. & Gr. I95; Ronsillon v. Ronsillon, L. R. 14
Ch. D. 351; Mills v. Dunham, I Ch. 576; Nordenfelt v. Nordenfelt Guns.
and Ammunition Co., 94 App. C. 535.
 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. 3 13

The development, in the United States, of this branch of

the law can hardly be said to have kept pace with the indus-
trial development of the country. Our courts have forgotten
that "Public policy is an unruly horse, and once you get astride
of him you never know where he will carry you," (per Mr.
Jpistice Burrough in Richardson y. Melish, 2 Bing. 229) and
have ridden that horse at every opportunity. At one time it
wys thotight that "with regard to domestic interests each state
is a separate community, and it is by no means the same thing
to the people of a state whether an individual carries on its
trade within or without its borders," and that therefore a re-
striction co-extensive in point of space with the boundaries of
a state was contrary to the public policy of that state, even
though the individual so restrained could exercise his trade
anywhere else, and this extremely liberal view prevails to-day
in Michigan.' Fortunately, however, as it came to be under-
stood that the states were not separate corn.munities with
respect to their business interests, a broader view prevailed,
and' even though a restraint be co-extensive with the state,
yet if it be reasonable the court will enforce it. If, however,
the restraint be co-extensive with the United States, the cur-
rent of authority would seem to hold it invalid, irrespective of
the question of reasonableness, though the courts of New York,
Missouri, and Minnesota, follow the modern English rule.!
From this cursory sketch of the development of the law, it
can be seen that the law as to contracts of this character is
founded -solely upon public policy, and as public policy
changes, so must the law change, and that therefore the ques-
tion as to whether or not a given contract is in restraifit of
trade is a question which depends upon what constitutes pub-
lic policy "at the time of the contract's enforcement."
. But, as is stated by Mr. Justice Peckham in his opinion, the
plain words of the Act of i89O are, "Every contract . . . in
restraint of trade . . is hereby declared to be illegal," and
the term includes all kinds of those contracts which in fact.
restrain, or may restrain, trade.
I Western Wooden Ware Association v. Starkey, 84 Mich. 76.
2 See Am. LAw RiEGISTR AND RFvI w, January, 1893, p. 50.
.314 CASE OF THE TRANS-IISSOURI FREIGHT ASSOCIATION.

What, then, is the technical meaning of the phrase, "con-

-tracts in restraint of trade." Does it include all contracts,
though they, in some measure, legally restrain trade, or is its
meaning restricted to contracts whose restraint is unreason-
able, and therefore invalid ?
It 'must be admitted that in the cases there can be found
-dictafrom numerous Judges who use the phrase, "contracts in
restraint of trade," as having a generic meaning, irrespective of
the question as to the validity of the restraint.
But, on the other hand, what is the historical origin of the
rule? How was it that contracts of this character fell under
the ban of the common law? t was not because they restrained
.trade in any way at all, but becakse they restrainedit in such a
manner as to be contrary to public policy.
It may be perfectly true that Dyers Case,1 and Colgate v.
Batchelor,2 decided that any restraint was invalid, but that was
because in those cases the courts declared that at that time
any restraint on trade was contrary to public policy.
As then public policy is the determining factor if the restraint
.of the contract is not contrary to public policy, then it is not
,invalid, and is not a" contract in restraint of trade." That this
definition is sound can be seen from an examination of some of
the -ecent decisions on this subject. In Brewing Association v.
I-ouck,3 a brewing association had entered into a contract with
certain persons to furnish beer to them and not to any other
person in a given city for the period of one year. In delivering
the opinion of the court, James, C. J., said (page 696): "We
-think that the contract entered into by the defendants and
their associates was not objectionable as being in restraint of
trade at common law."
In Davis v. Brown,4 Guffy, J., said: " A conitract on the
-part of appellant to not engage in the buggy business in ' 0'
.county was not void as being in restraint of trade."
In B. E. V R. R. Co. v. N. V R. R. Co.,5 Dean, J., in de-
l 1415, Y. B. 2 H. 5, p1. 22.
2Cro. Rliz. 872.
3 1894, 27 S. W. 692, 88 Tex. 184.
' 1895, 32 S. W. 614.
- 1895, 171 Pa. St. 284-299.
 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. 315

livering the opinion of the court, sustaining an agreement by

which a railroad company contributed money for the develop-
ment of ore land, the owner thereof agreeing to give to the
railroad company all traffic to and from the land and the
furnace thereon, said: "It is not in restraint of trade, for the
express purpose and necessary effect are to increase both
trade and population,"
In dtthew v. Associated Press of New York,' the question
before the court was as to the validity of a by-law of a new
association, which in terms prohibited the members from
receiving or furnishing "the regular news dispatches of any
other news association covering a like territory and organized
for.a like purpose. Mr. Justice Peckham (then a judge of the
Court of Appeals of New York), for the court, said (p. 340):
"The latest decisions of courts in this country and in England
show a strong tendency to very greatly circumscribe and
narrow the doctrine of avoiding contracts in restraint of trade.
The courts do not go to the length of saying that contracts
which they now would say are in restraint of trade are, never-
theless, valid contracts, and to be enforced; they do, however,
now hold many contracts not open to the objection that they
are in restraint of trade, which a few years back would have
been avoided on that sole ground, both here and in England
.... So that, when we agree that a by-law which is in
restraint of trade is void, we are still brought back to the
question, What is a restraint of trade in the modern definition
of that term?
The authority to make by-laws must also be limited by the
scope and purpose of the association. I think this by-law is
thus limited, and that is not in restraint of trade, as the courts
now interpret that phrase."
So, also, the House of Lords, in Nordenfelt v. Nordenfelt
Guns and Ammunition Company,2 held valid an agreement
under which a patentee and manufacturer of guns and ammu-
nition for purposes of war, covenanted with a company to
which his patents and business had been transferred, that he
1136 N. Y. 333.
2 94 Ap. Cases, .535.
 316 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION.

would not for twenty-five years' engage, either directly or

indirectly, in the business of a manufacturer of guns and
amunition, not because the agreement in question was in
reasonable restraint of trade, and therefore valid, but because
its reasonableness prevented it from being in restraint of trade.
No one can doubt that the agreement in every one of these
cases in some measure restrained trade; but as the opinions
quoted show that they were not technical contracts in restraint
of trade, they could only become so when their restraint was
unreasonable.
Is not also the title of the act in harmony with this view?
It reads: "An act to protect trade and commerce against
unlawful restraints and monoplies;" not an act to protect
trade against any restraint whatsoever, but an act to protect
trade against unlawful restraints-that is, unreasonable ones-
and it is submitted that the title of the act can be used as
an aid to the construction of the body of the statute, not to
contradict its plain terms, but as a help to determine the
doubtful ones.'
Indeed, Mr. Justice Peckham admits (page 222) that "A
-contract which is the mere accompaniment of the sale of
property, and thus entered into for the purpose of enhancing
the price at which the vendor sells it, which in effect is col-
lateral to such sale, and where the main purpose of the whole
contract is accomplished by such sale, might not be included,
within the letter or spirit of the statute in question." Why
should a contract which is collateral to a sale be exempted
from the operation of the statute while a contract not collateral
to a sale be subject thereto ?
There is nothing in the statute expressly or implicitly which
would support such a construction. It would seem as if the
learned judge was constructing a means by which the court
might in future escape from the consequences of a strict
adherence to his views.

1U. S. v. Palmer, 3 Wheat. 61o, 631; Coosaw Mining Co. v. S. C.,

144 U. S. 550, 563.
2 The paging refers to Senate Document No. 12, Fifty-fifth Congress,
£rst session, which contains the opiniona filed in the case.
 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. 317

But, objects Mr. Justice Peckham, in view of the difficulty

of determining what is reasonable, to say that the reasonable-
ness of such an agreement as this is the the test of its validity
"is substantially to leave the question of reasonableness to
the companies themselves."' This is a difficulty which the
courts have always been able to overcome in the four hundred
years in which such questions have come before them. They
have always solved the problem whether it was before them as
.an individual restraint or in the form of a combination of capital
to control the production or sale of a particular article. Indeed,
that very court, of which Mr. Justice Peckham is an honored
member, has decided that the question as to the reasonableness
of railway rates is a judicial and not a legislative one.' Even
if the rules were likewise this association did not or could not
fix a particular rate and compel its members to abide thereby.
Assuming, then, that the invalidity of the agreement de-
pends upon its unreasonableness, are the provisions of the
agreement in question unreasonable; that is, are they contrary
to the interests of the public, and in deciding this question,
the burden of proof is upon the one who asserts its invalidity 3
But, says Mr. Justice Peckham, the business which the
railroads do, is "of such a public nature that it may well be
doubted, to say the least, whether any contract which imposes
any restraint upon its business would not be prejudicial to the
public interest."4 Quoting in support thereof Fuller, C. J., in
Gibbs v. Baltimore Gas Company, 130 U. S. 596, as to the
distinction between the rules governing business of a public
and private nature. Now it is perfectly true that public policy
varies in this respect, but it is submitted that it is a difference
which is not ipso facto determined by the character of the
business. Another element must be considered, viz: the tran-
saction itself, which is said to be in contravention of public
policy.
It is believed that there is no authority other than loose
' Page 24.
2189o, C. M. & St. P. Ry. Co. v. Minnesota, 134 U. S.; 1894, Reagan
v. The Farmers' Loan & Trust Company, 154 U. S. 362.
3 Mr. Justice Chitty in Mills v. Dunham, 91, Ch. C. A. 576.
4 Page 24.
318 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION.

dicta, for the proposition that business of a public nature may-

be of such a character that any restraint whatsoever is incom-
patible with the interests of the public, irrespective of the
nature thereof.
Examine the cases cited by Chief Justice Fuller. In Trans-
portation Company v. H pe Line Company, 22 West Va. 6oo, a
grant of an exclusive right-of-way over a tract of land for an
oil-pipe line was held void. Now a careful perusal of the
opinion of the court (especially page 625) will show that the
basis of the decision of the court was that the people of West
Virginia had, by various statutes, emphatically declared that
it was the public policy of that State that the business of
railroading, telegraphing, and transportation of oil by pipes,
should be carried on at any place that a corporation chartered
for that purpose might choose.
In other words, the agreement in question was illegal, be-
cause contrary to public policy, and it was contrary to public
policy, because the effect thereof which was to prevent corpor-
ations chartered for a public purpose, and a purpose in the
performance of which the public had a peculiar interest, from
the performance of their corporate duties.
In The Western Union Telegraph Company v. The American
Union Telegraph Company,' the court held that: An agree-
ment by a railroad company granting to a telegraph cbmpany
the exclusive use and occupation of its right-of-way, was void
because the means of inter-communication should not be
monopolized, thus crippling competitors, and enabling one
company to fix its tariff of rates at a maximum, governed
alone by the necessities of its patrons.
So, in the Chicago Gas Light and Coke Company v. The
Peoples' Company, 121 Ill. 530, where two Gas Companies
had divided the City of Chicago, and agreed not to compete
within each other's territory, the agreement was held bad, as
tending to create a monopoly, and as an agreement not to
perform the public duties for which the companies were
chartered.
Again, where two railroads enter into an agreement not to
65 Ga. I6o.
 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. 319

extend their roads, the agreement is void as a renunciation of

their corporate duties;' but on the other hand traffic arrange-
ments for through transportation, i. e., arrangements for through
tickets over connecting routes, are perfectly valid, and they
may also provide for the division of fares based upon mileage.2
Also a railroad company may legally give another transpor-
tation company a monopoly of the handling of the business of
the railroad 3
As briefly summing up the principle of these cases, it may
be said that there is no business, whatever be the public
interest therein, that any restraint thereon is, ipsofacto, void,
but, if the effect of the restraint be to form a monopoly of
such business, or to prevent a public corporation from the
performance of its chartered functions, then, the agreement is
void.
The mere fact, therefore, that the business which was affected
by the restraint, of the Trans-Missouri agreement was a busi-
ness in which the public had a peculiar interest did not, ipso
facto, render any restraint thereon invalid; nor did the agree-
ment, on the -other hand, violate in any manner the public
policy of the United States as expressed in its statutes, or as
-declared by its courts.
The distinguishing characteristic of the Trans-Missouri
agreement was the attempt to prevent thereby the secret under-
cutting of rates as published, and also to secure the same
.against sudden and arbitrary changes. There was no attempt
to maintain rates at an agreed figure, if any party to the agree-
.ment gave public notice of an intention to adopt some other
rate.
In considering the question as to whether or not the agree-
ment under consideration is contrary to the public interests, it
'H. & N.W. R. R. Co. v. N. Y. & N. H. R. R. Co., 3 Rob. 411 ; State
.v. H. & N. H. P. R. Co., 29 Conn. 538; D. & N. 0. R. Co. v. N. A. T. &
S. F. Co., 15 Fed. Rep. 65o.
2H. & N. H. R. R. Co. v. N.Y., N. H. & H. R. R. Co., 3 Robb, 41r;
R. R. v. Ry. Co., '9 N. S. Eq. 113; 2o N. J. Eq. 542; Stuart v. B. & W.
-Transportation Co., 17 Minn. 372; Elkins v. . R. Co., 36 N. J. Eq. 246.
3Richmond v. R. R. Co., 22 Iowa x91; Perry Co. v. R. R. Co., 73 Mo.

_39r; R. R. Co. v. R. R. Co., hio U. S. 667; P. R. Co. v. Pullman

.Southern Car Company, 139 U. S. 79.
320 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION.

is submitted that we must not assume, a priori, that free and

unrestricted competition of every description is, ipsofacto,bene-
ficial to the public at large. "It is a mistaken notion," said
Vice-Chancellor Wood, "that the public is benefited by pitting
two railway companies against each other till one is ruined,
the result being at last to raise the fares to the highest possible
standard." 1 But it must be admitted that the maxim as to free
competition has been as prominent and as obtrusive in the
minds of certain judges in their application of this branch of
the law as King Charles' head was in Mr. Dick's literary
efforts. Such was the ratio decidendi in Hooker v. Vandewater,
4 Deq , 349; Stanton v. Allen, 5 De)O, 434; M/orris Run
Coal Co. v. Barclay Coal Co., 68 Pa. St. 173; and G. & P. Ry.
Co. v. The Sp. Ry. Co., 41 La. Ann. 970.
As a matter of fact, such a maxim has no part in modern
political economy, and should have no part in modem juris-
prudence. Have we not seen and heard enough of the bene-
fits of free competition? Where is the benefit to the public in a
rate war which reduces rates to a point insufficient to pay the
operating expenses and fixed charges of a railroad and forces
the road int6 a receivership ? It is not urged that the railroads
should be allowed to combine to charge excessive rates; but
there is an adequate remedy for this in the machinery of the
Inter-State Commerce Commission, and it is believed that the
interests of the public are secured by such an agreement as
that of the Trans-Missouri Freight Association.
There was nothing in it which sought to oppress the public.
There was no agreement to maintain rates; in fact a means
was especially provided by which any party to the agreement
could lower its rate when it wished to. It was denied in the
defendants' answer that they intended to unjustly augment
those rates or counteract the effect of free competition, and as
the cause was heard on bill and answer, the truth of the facts
averred in the latter was undisputed. Surely there is nothing
in such an agreement which is contrary to public interests. In
fact it is in furtherance thereof A somewhat similar agreement
came for determination before the Supreme Court of New
'Hare v. L. & N. R. Co., 2J & H. Ch. Rep. 8o, 1O3.
 CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. 321

Hampshire and was unhesitatingly upheld.' No better state-

ment of the fallacy of unrestricted competition can be found
than the opinion of Blodgett, J., in that case. He says, inter
alia, "For the lessons of experience, as well as the deductions
of reason, amply demonstrate that the public interest is not
subserved by competition which reduces the rates of transpor-
tation below the standard of fair compensation; and the
theory which formerly obtained that the public is benefitted
by unrestricted competition between railroads has been so
emphatically disproved by the results which have generally
followed its adoption in practice that the hope of any perma-
nent relief from excessive rates through the competition of a
parallel or rival road may, as a rule, be justly characterized as
illusory and fallacious. Upon authority, [also, arrangements
and contracts between competing railroads, by which un-
restrained competition is prevented, do not contravene public
policy."
If, then, the construction of the Act of 189o advanced by the
majority of the court renders that act unreasonable, is it not a
mistake to prefer such a construction to one which will, in
entire accord with public interests, amply protect the public
against extortion, and at the same time enable the railroads
to pay their debts, and to render a fair return to their share-
holders, who, after all, are a part of that same public whose
interests the court would so jealously guard.
George Stuart Patterson.
Philadelphia, May 1, 1897.

I M. & 14. R. R. v. Concord R. R., 2o AUt. 383.